Fund Description

The fund seeks long-term total return by investing at least 80% of its net assets in investments of small-capitalization companies, which are those with market capitalizations not exceeding either the highest market capitalization of the Russell 2000 Index or the 12-month average of the highest market capitalization in the Russell 2000 Index, whichever is greater at the time of purchase.

Strategy Statement

"We seek under-researched, small-cap companies ignored by Wall Street using a bottom-up strategy to find forgotten companies with good growth prospects, strong balance sheets, and bargain valuations."


Steven Raineri

Steven Raineri

  • Joined Franklin Templeton in 2005
  • Managed Fund Since 2012
Christopher Meeker, CFA

Christopher Meeker, CFA®

  • Joined Franklin Templeton in 2012
  • Managed Fund Since 2015
Nicholas Karzon, CFA

Nicholas Karzon, CFA®

  • Joined Franklin Templeton in 2014
  • Managed Fund Since 2019


Investment Process


Overall Morningstar Rating As of 05/31/2020

Rating Category: Small Value

The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

Historical Morningstar Rating As of 05/31/2020

Years Ratings Funds
in category
5 Stars
5 Stars
5 Stars

Morningstar Style Box As of04/30/2020

Strategy, Benefits, Results


We are long-term, bottom-up investors looking for companies with solid operating results and trading at attractive valuations. We are bargain seekers looking for $1 worth of value for 80 cents.

We seek small-capitalization companies with the following characteristics:

  • Well managed companies with strong fundamentals that are selling at bargain valuations.
  • Stock prices that are low based on earnings, book value, cash flow or sales relative to the market, a company's industry or a company's earnings record.
  • Recent sharp price declines but the potential for good long-term earning prospects.
  • Valuable intangibles not reflected in the stock price, such as franchises, underused or understated assets or cash, or patents and trademarks.

We are buy-and-hold investors who generally seek to hold an investment for five or more years.


  • Small-Cap Exposure. We aim to take advantage of the prospects particular to small-cap companies, which may not exist among larger companies.
  • Broad Market Exposure. We invest in a variety of companies across multiple sectors and industries.
  • Value Expertise. Investors can benefit from our veteran management team with extensive value investing experience.

Selling The Fund

  1. Stress that the fund managers focus on investing in companies with low debt, an increasingly important characteristic.
  2. Point out the manager's value expertise and management team's long tenure and the fund's track record.
  3. Emphasize the broad market exposure to companies across all sectors and industries.